O.C. v. State Farm Mutual Automobile Insurance Company, 2017 CanLII 87159

Date: 2017-12-22

Tribunal File Number: 17-004055/AABS & 17-004060/AABS

Case Name: 17-004055 & 17-004060 v State Farm Mutual Automobile Insurance Company

In the matter of an Application for pursuant to subsection 280(2) of the Insurance Act, RSO 1990, c I.8., in relation to statutory accident benefits.

Between:

O.C.

Applicant

and

State Farm Mutual Automobile Insurance Company

Respondent

AMENDED DECISION

Adjudicator: Christopher A. Ferguson

APPEARANCES

For the Respondent: Maciek R. Piekosz, counsel for the respondent in this motion [claimant]

For the Applicant: Sharla Bandoquillo, counsel for the applicant in this motion [insurer]

Written Hearing Held November 7, 2017

OVERVIEW

1O.C., (“the applicant”) was injured in two automobile accidents on August 30, 2013, and November 23, 2013.

2The applicant sought benefits relating to both accidents, pursuant to the Statutory Accident Benefits Schedule – Effective September 1, 2010¹ (the ''Schedule'') and applied to the Licence Appeal Tribunal (the “Tribunal”) when the disputed benefits were denied.

3The parties’ dispute includes, among other claims, two applications for a non-earner benefit (NEB):

1. 17-004055/AABS -- Is the applicant entitled to receive an NEB in the amount of $185.00 per week from May 14, 2015 to date and ongoing?

2. 17-004060/AABS -- Is the applicant entitled to receive a non-earner benefit NEB in the amount of $185.00 per week from July 2, 2015 to date and ongoing?

5The applicant requests cost for the preliminary hearing.

6The applicant’s two applications have been consolidated on consent. For ease of reference, I will follow the parties’ lead and refer to the two claims as “the August claim” and the “November claim” respectively.

PRELIMINARY ISSUE

7Before the dispute on entitlement to NEBs can be determined, I must determine whether the applicant is precluded from bringing the two applications for NEBs pursuant to s.56 of the Schedule.

8The respondent attempted to raise a procedural bar to the NEB claims in its submissions. These did not form a part of the issue set out in the Order or Case Conference Report; accordingly, I will not address any procedural issues not governed by s.56 of the Schedule.

FINDINGS

9The applicant is barred by s.56 from appealing the respondent’s denial of her August claim for NEBs.

10The applicant is not barred by s.56 of the Schedule from appealing the respondent’s denial of her November claim for NEBs. That portion of the appeal should proceed.

11The applicant’s request for costs in this preliminary matter is denied.

REASONS

12Section 56 of the Schedule requires an appeal to be commenced within two years after the insurer refuses to pay the amount claimed. If two or more years have passed since the insurer’s denial of a claim, the insured person is barred from filing an appeal of that denial. This is called the “limitation period”.

13As noted by the respondent and uncontested by the applicant, the limitation period does not begin until the insurer has issued a clear, straightforward and unequivocal denial or refusal of the benefits.²

14An insurer cannot raise the limitation period as a bar to an appeal of its denial if its own conduct led the insured person to delay his or her appeal beyond the limitation period.³

15The insurer has moved to bar both of the applicant’s appeals for NEBs based on its position that she failed to file her appeals within the s.56 limitation period.

The August Claim

16The undisputed evidence for the August claim is that the respondent issued a notice of denial dated May 6, 2015 (effective May 13, 2015) terminating the NEB it had been paying up to that time.

17The applicant’s denial provides reasons and refers to its two insurer’s examination (IE) reports. My reading of the denial notice is that it is clear, straightforward and unequivocal, as required.

18The applicant filed her appeal of the respondent’s denial on July 20, 2017.

19The applicant’s submissions offer no explanation for her delay in responding to the denial of the August claim beyond the limitation period.

20I find that the August claim is barred from appeal by the limitation period.

The November Claim

21The chronology of events for the November claim is this:

1. December 6, 2013

OC files the November claim for NEBs with the insurer. Her claim arises from the November 23, 2013 accident.

2. March 14, 2014

The insurer issues a notice denying OC’s November claim for NEBs because she was already receiving NEBs under the August claim.

3. May 6, 2015

The insurer issues a notice that it will stop paying NEBs under the August claim.

The insurer does not refer to the November claim or its denial notice of March 14, 2014.

The basis of the denial is the IE Report dated April 15, 2015 and February 13, 2014.

4. July 2, 2015

The insurer issues a new denial notice covering the November claim.

The insurer indicates new reasons for denying the claim, namely IE reports from Drs. Jerome dated April 23, 2015 and Dr. Hummel dated February 12, 2014.

5. June 20, 2017

OC files her appeals with the Tribunal with respect to the November claim. The summary portion of the application included NEB and a claim of entitlement from the date of stoppage to date and ongoing.

22The applicant maintains that her appeal regarding her November claim was within the limitation period because the insurer “issued multiple denials citing multiple dispute timelines for the NEBs in the November claim”, creating uncertainty and precluding reliance on the limitation period defence per Zeppieri v. Royal, cited above.

23The applicant also points me to another adjudicator’s reasoning in SAR v. Allstate⁴ a similar case insofar as it dealt with multiple denial notices and whether the insurer could rely on its initial notice as the one setting the limitation period start date. In SAR v. Allstate:

i. The claimant was permitted to proceed to appeal the denial of medical benefits because the claimant was confused by and relied on the wording of the last denial notice about the right to appeal the denial -- “within two years of receiving this notice” -- to determine the limitation period.

ii. The claimant was barred from appealing an NEB claim because the insurer had unambiguously pointed to an original denial date and stated that its reasons for denial – medical evidence from the same IE cited in each denial -- were unchanged.

24I find the reasoning in SAR v. Allstate helpful and persuasive in determining this matter.

25I agree with the applicant that the respondent’s denials of the November claim were confusing and misleading – however unintentionally – to the applicant. The insurer used the words “within two years of receiving this notice” in setting out the appeal rights in its last denial notice dated July 2, 2015. When I read this myself I interpreted it as confirming that the notice informed the respondent that she had two years from the date of July 2, 2015 to appeal the denial of her November claim.

26In reading its July 2, 2015 denial notice, I noted that the insurer did not point unambiguously to its previous denial of the November claim, dated May 14, 2014, or any other previous denial as its “unchanged position”, which might have enabled it to argue that it could rely on earlier denials as the start of the limitation period.

27Indeed, the July 2, 2015 denial provides an entirely different reason – medical evidence from IEs – than the March 14, 2014 denial (“you are already receiving NEBs under a previous claim”). This in in contrast to the situation in SAR v. Allstate, where the date of an initial denial for NEB was upheld as the start of the limitation period through subsequent denials in part because its position on the reasons for denial remained unchanged.

28Against these findings, I did not find the respondent’s arguments at all persuasive. I find the case law it cited to be unpersuasive and mostly not on point given the facts of this case.

29The respondent states that its denial of March 14, 2014 met the requirements for a valid denial. But that is not at issue here. What is at issue is the subsequent denial which provided conflicting and confusing information to the applicant.

30Its contention that the July 2, 2015 denial was a “reiteration” of its March 14, 2014 denial and “consistent to” [sic] its initial position of denying the claim simply does not square with the facts of this case as I see them. A complete change in the reasons for denial – with the original reason no longer applicable, as in this case -- does not constitute a “consistent position”. In this case, the reasons that would permit the insured person to decide whether or not to challenge were radically changed from one denial to the next.

31It would have been easy for the respondent, as a sophisticated and experienced service provider, to make it clear and unambiguous to its client its position that her limitation period had started on March 14, 2014. It simply failed to do so – and in the process garbled a key piece of information that would have influenced the respondent’s decision with respect to this appeal.

32The applicant’s reliance on the information provided to her by the respondent should not be used against her to deny her appeal rights: she is entitled to rely on the advice provided by the insurer in the last denial notice.

33I find that the limitation period for the November claim began on July 2, 2015. The applicant filed the appeal with the Tribunal on June 20, 2017, within the limitation period.

34I also find it important to note that the respondent makes no argument that its ability to defend the merits of the November claim for NEBs would be prejudiced by proceeding with the appeal. By contrast, the prejudice to the respondent of being barred from appeal is obvious and serious. Accordingly, I find that allowing the appeal to proceed is not only legally correct but equitable and fair.

35I conclude that that the application for NEBs with respect to the November claim is not statute-barred. The appeal should proceed, with the NEB issue defined as:

Is the applicant entitled to receive a non-earner benefit NEB in the amount of $185.00 per week from July 2, 2015 to date and ongoing?

Costs

36Rule 19.1⁵ permits a party to request that the Tribunal order the other party to pay costs, where the requesting party “believes that another party in a proceeding has acted unreasonably, frivolously, vexatiously, or in bad faith”.

37The applicant requests cost for the preliminary hearing arguing that the applicant seeks, with this motion, to re-litigate points it raised and were settled in a previous Tribunal case. She asserts that “this is unreasonable conduct that must be deterred”.

38I find that the applicant’s assertions unpersuasive. Tribunal decisions do not set binding precedents and there is no legal basis to assert that the applicant was required to adjust this file based on the outcome of that case.

39Accordingly, I find no basis on which to decide that the respondent’s conduct in this matter has met the test of Rule 19.1.

40Costs are denied.

Footnotes

1. 1O.Reg. 34/10.
2. 2Smith v. Co-operators General Insurance Co., [2002] 2 S.C.R. 129, 2002 SCC 30 (S.C.C.), at para. 14.
3. 3Zeppieri v. Royal Insurance Co. of Canada 1994 CarswellOnt 7389, [1994] OICD No.13, at para. 44 and 50.
4. 4SAR v. State Farm Mutual Insurance Co., 2016 CarswellOnt 21531 (ON LAT), at para. 17-19.
5. 5All references to a “Rule” are made to the Licence Appeal Tribunal Rules of Practice and Procedure, Version I (April 1, 2016).```